Texas shifts Medicaid outsourcing

Texas Health and Human Services Commission

The Texas Health and Human Services Commission awarded a contract worth about $100 million to Affiliated Computer Services Inc. (ACS) to take over the state's outsourced Medicaid program through August 2007, according to a company official.

The deal, announced Feb. 24, has two one-year options and includes several subcontractors. One is Accenture, a prime subcontractor that will help with the transition and oversee all technological aspects.

ACS is taking over operations from National Heritage Insurance Co., an EDS subsidiary. The company will process claims and provide primary case management services.

The state is a big win for Dallas-based ACS, which already administers Medicaid contracts in 13 states, including Florida and Washington, D.C., said Penny Pasquesi, vice president of marketing. She said the new contract would deliver some cost savings for Texas because ACS is able to combine administrative functions for several state Medicaid programs.

More than 2 million Texans are covered under Medicaid, a state- and federally funded health program for low-income, elderly and disabled individuals. Last year, the state, whose fiscal year ended August 2002, spent $14.3 billion on the program.

David McCurley, a partner with Accenture, said that for many years, a majority of state governments have been outsourcing all or a significant portion of their Medicaid programs, including operations and technologies. The driving factors are improving efficiency and lowering administrative costs, he added.

Among other improvements, his company plans to develop a self-service portal for providers. Some initial applications include a Web-based version for providers to look up a person's eligibility, he said. Currently, a PC-based software enables providers to check on a person's eligibility via a dial-up connection into the system, but users have said it's too slow. An interactive voice response system also is available, but that gets "bogged down," he added.

Input was sought from providers, including the state's medical and hospital associations, regarding systems improvements and how the Internet could help, McCurley said. Other future enhancements include a claim status inquiry, so providers can find out when payments will be made to them, and self-help administrative functions, so that users can make changes regarding their addresses, contact information, billing, etc., he said.

Pasquesi said that other subcontractors include:

* Hewlett-Packard Co., providing data center operations, local-area network management and desktop support.

* SBC Communications Inc., for voice and data communications and wide-area network management.

* Computer Associates International Inc., for software and technical tools.